Do you live in an older condominium building in a prime location? Have you ever thought about terminating your condominium in order to sell your older building to a developer desirous of your location? Has the fact that your older building is going to require significant ongoing maintenance and repairs become an inducement to consider termination?

I heard earlier last week from the son of a woman who lives in a Boynton Beach community which has accepted a developer’s offer to purchase the condominium property and terminate the condominium form of ownership. He was citing the provisions in Section 718.117, F.S. relating to waste and questioning whether or not the termination of his mother’s condominium met that litmus test. I provided him with the voluntary termination provisions in that same section of the Condominium Act and explained that 80% of the owners can vote to terminate the condominium form of ownership for any reason so long as not more than 10% of owners do not object to same.

Florida’s Condominium Act was changed a few years ago to make voluntary condominium terminations possible so that owners could take advantage of offers to purchaser without being hamstrung by a handful of their neighbors. This last session saw language pass which now requires a delay in voting on a termination for several months after an initial vote fails to achieve the necessary threshold.

The downside to any termination is that an owner could have purchased his or her unit at the height of the market, taken a mortgage and when the termination is approved, receive fair market value which is far below the outstanding mortgage balance. The upside to the voluntary termination provisions is that it allows the vast majority (80%) of owners to take advantage of an advantageous developer offer to purchase an older building in a prime location.

There will always be owners who resist a termination offer as being a hassle or not likely to result in sufficient monetary gain. However, for others the ability to make an otherwise unconsidered real estate gain, the offer may be too good to turn down. Still others may be disenchanted with the condominium concept altogether and would welcome the opportunity to “cash out”.

Has your condominium community been approached about a possible termination and what would you do if you were?

We’ve all seen the construction cranes going up, now the data confirms our suspicions. According to Cranespotters.com, there are 247 South Florida condominium projects in the works. Condominium sales currently make up half the home sales in South Florida. This trend of renewed condominium construction is not confined to our geographic area but is being seen throughout the U.S., particularly in Boston, Seattle, LA, Houston, New York City and San Francisco.

Many industry experts see this period as the early stage of a long-term recovery in the condominium market. South Florida developers with whom I have spoken expect the bulk of these units to be purchased by foreigners and, to a lesser extent, local empty nesters who are looking to downsize and transition to a more urban and convenient lifestyle. Let’s face it, if you want a certain location combined with a relatively maintenance-free lifestyle, single family home ownership is not likely to meet those goals. A single family home on or near the beach is going to cost a lot more than a condominium unit and require extensive upkeep.

With this flurry of condominium construction surrounding us, it does raise the question of whether or not the intended purchasers of these units will be happy long-term with their choice. One way to ensure that your housing purchase remains a good fit is to do your due diligence ahead of time.

Certainly, you need to read the governing documents and association policies thoroughly and ask yourself if any of the restrictions currently impact your lifestyle or could do so in the future. Attending a condo class or hiring an association attorney to give you an overview of what items in your association documents could change over time is also not a bad idea.

However, there are some things that are typically out of your control no matter how much deliberation and planning go into your condominium purchase. Why? Because the game changes after you transition from developer control. For example, you will probably not know:

-Who will sit on the board of directors after the community transitions from developer control.
-Whether or not a chronic smoker will move in next door.
-Whether or not the required soundproofing material was installed in the unit above yours.
-Whether or not the developer will deliver a structurally sound and defect-free community.
-Whether or not the assessments you are paying while the developer is in control will go up a little or a lot (assume the latter).
-Whether or not the developer has left the association’s coffers financially sound.
-Whether or not you or a neighbor will need a service animal or emotional support animal at some point.
-Whether or not you will be outvoted on most matters in the future including amendments to the documents, funding reserves and material alterations to the common elements.

For condominium purchasers, a cost/benefit analysis is in order along with a leap of faith. Know that some things are entirely in your control including your choice to either be part of the solution or part of the problem.

As for the developers who have such high hopes for their new projects, they would be well advised to start taking into account the long-term comfort and peace of mind of their purchasers by creating certain safeguards (both in the documents and structurally) to ensure that the condominium lifestyle choice remains a popular one for many people. There are ways to better insulate units from secondhand smoke and noise but tight budgets are often earmarked for bells and whistles that can be seen and not more mundane items.

So, will I ever leave my suburban home and delve into the condominium lifestyle? Time will tell.

Fellow Sun Sentinel bloggers, Jean Winters and Lindsay Raphael, recently wrote about the Sabal Palms case where a disabled woman won a significant settlement based on her association’s denial of her service animal request. One of the facts that makes this case compelling in my opinion is the fact that yet another association has relied upon, in part, the counsel of an attorney who apparently does not specialize in community association law. The same problem occurred many years ago when a retired NY attorney counseled his Broward County homeowners’ association improperly on a “55 and over” restriction which ultimately resulted in the association filing for bankruptcy protection due to its inability to pay a large discrimination claim.

Most community association boards are comprised of people from all walks of life and different professions; that kind of diversity often brings a much-needed range of experiences and skills to the sometimes complicated task of operating and administering a private residential community. However, when dealing with board members who also happen to be attorneys, there is the added wrinkle of fellow directors or association members expecting free legal advice from that director or the director himself or herself offering up such advice which can be far beyond their professional expertise.

Certainly attorneys who do practice community association law are capable of making mistakes, losing cases and even rendering an overall unsatisfactory result. However, the chances of a matter going terribly awry increase dramatically when you rely upon the advice of an attorney who is neither licensed to practice law in the State of Florida nor actually handles community association matters as part of his or her routine legal practice.

The standard analogy can be applied to the medical field-you wouldn’t go to a podiatrist if you were having chest pains. Boards should resist the temptation to seek free legal advice from fellow directors who just happen to be attorneys as the old adage “you get what you pay for” comes to mind.

FHA Certification does two things for a community association and its members: it allows residents to obtain a Home Equity Conversion Mortgage (HECM) and it opens up the pool of eligible homebuyers who are seeking FHA-backed loans when purchasing their home.

An HECM is a reverse mortgage which is a loan that is available to qualified homeowners who are 62 years or older. A reverse mortgage enables seniors to stay in their homes while they receive advances on the loan, the repayment of which is secured by the equity in their homes.

An in-depth discussion on the pros and cons of reverse mortgages is beyond the scope of this blog but a major advantage is that it does not need to be repaid as long as the homeowner resides in the property and does not otherwise default on the loan (i.e.. by failing to mainteain property insurance or by not paying property taxes).

Some private banks do offer reverse mortgages, however, the only reverse mortgage product insured by the U.S. government is the HECM which is insured by the FHA.

With regard to the second part of the certification equation, FHA loans permit a lower down payment which makes them very attractive to homebuyers. In 2009, FHA loans comprised approximately 2% of the loan market; in 2010, that figure had climbed to 40%. Given the popularity of the FHA loan product, not being certified means community members may have a much smaller pool of people interested in buying their homes.

There are basic eligibility requirements which must be met in order for a community association to receive FHA certification. The certification process is not nearly as complicated or costly as some people believe. Well-managed and financially stable communities typically experience no problems in becoming FHA certified. If your community wishes to be certified by the FHA, the following guidelines must be met:

-No more than 15% of your units can be delinquent for more than 30 days.
-At least 50% of the units must be owner occupied.
-At least 10% of the association’s budget must be allocated for reserve funding.
-The association must have adequate insurance coverage.
-There can be no pending litigation other than routine collection activity.

If your community wishes to seek FHA certification, please contact me via email at dberger@bplegal.com or by phone at 954-364-6031.

Yesterday was Mother’s Day and I was fortunate to not only be able to thank my mom for all her hard work raising my three siblings and me but also to have my two children spending time doing the same for me. Of course, this particular holiday wouldn’t be the same without reflecting on some of our mom’s best advice. Two of my mother’s favorites were “you can get more flies with honey than vinegar” and “never underestimate the importance of a thank you.”

In the community association setting, both of those pieces of advice might prove to be helpful for both board members and residents. There are legitimate gripes in some private residential communities stemming from sometimes boorish behavior displayed in often equal measure by the leaders and the led. Still, I wonder how many of these situations could be defused with a tactful or, even better, a kind word as opposed to “pouring fuel on the fire”-another one of my mom’s favorite sayings.

Last week, the media reported that a woman went to the house of her HOA president to discuss the need to implement a neighborhood watch program due to security issues in the community. The conversation quickly got heated and the woman was arrested for assaulting the president. If I were to play psychologist for a moment, I would surmise that the woman likely believed the president was not taking her security concerns seriously and the president likely felt that his volunteer efforts were under attack or simply not appreciated. In any event, the outcome of the conversation benefited neither the community nor the individuals involved.

When legitimate concerns exist, they must be explored. Sometimes the outcome of that due diligence requires the recall of a director or directors who are not acting in the community’s best interests. The same decision-making process might result in a resolution to pursue enforcement action against owners who fail to comply with the governing documents. However, some of these issues on both sides of the fence could be avoided or at least defused if people took their moms’ best advice and acted with a little more deliberation, tact and sensitivity.

If you live in a community association but do not serve on the board, when was the last time you thanked someone who is serving on the board? If you serve on a board, when was the last time you encouraged members to attend your meetings and thanked those who took time to show up and do just that? Experience shows that positions harden in the presence of antagonistic words and hostile demeanors.

Appreciation is a two-way street and if we had more of them in our communities, we would have fewer mishaps.

The 2014 Legislative Session ended last Friday, May 2nd after the House and Senate voted on the budget. This Session was no different from others in years past where a plethora of community association proposals were drafted, debated and ultimately passed. This year’s crop of new legislation addresses a wide range of issues including voluntary termination of condominiums, holding HOA meetings in handicapped-accessible locations, identifying which activities licensed community association managers can undertake without being accused of the unlicensed practice of law, controlling vacation rentals, disclaiming a developer’s practice of retaining mineral and other subsurface rights when real property is sold, conveying emergency powers to Cooperative and HOA boards, addressing the use of email by directors and requiring outgoing directors and committee members to turn over documents in their possession within five days or risk a civil penalty among other items.

Would you like to know what drove this year’s association legislation and what to expect next year? The not-for-profit Community Association Leadership Lobby (CALL) will be holding a Legislative Town Hall on Friday, June 13th. Come join us for a frank discussion with this year’s bill sponsors and other public policy makers to find out what these changes mean for you and your community.

This free event is open to the public and will take place at the Ft. Lauderdale City Hall Commission Chambers-1st Floor from 10:00 am to Noon. Refreshments will be served from 10-10:30 am with the legislative panel commencing at 10:30 am.

Seating is limited. You must register in advance to attend this event as registrations will not be accepted at the door. To register for CALL’s Legislative Town Hall visit the Events Page at:

Having new statutory rights and protections are only beneficial if your board, manager and members know about them. Don’t miss this opportunity to find out directly from your legislators what passed up in Tallahassee and why.

Sun Sentinel Reporter, Brett Clarkson, reported last week about a Jupiter woman who sued State Farm for damages to her condominium unit and personal property as a result of bodily fluids leaking from her neighbor’s corpse. Yes, you read that sentence correctly.

Judy Rodrigo hoped that State Farm would agree that her neighbor’s corpse exploded, thus creating an insurable event. State Farm, however, resisted categorizing a decomposing body as an explosion. For purposes of this blog, the topic of discussion is not really the bio-mechanics of Ms. Rodrigo’s claim as much as it is how far afield we have gotten from what it means to live in a community. Certainly, it takes some time for the decomposition process to occur and to create the kind of situation that Ms. Rodrigo experienced. How is it possible that the dead woman went unnoticed for many days or weeks? Although the reporter did not delve into the deceased woman’s personal life, clearly she lived alone or the fact that she had died would have been discovered at some point. How many communities take note of their single residents, particularly those who may be older or in need of medical attention, and obtain emergency contact information for those folks as well as make a point to check in with those residents on a frequent basis?

Chances are that many of us will wind up living alone at some point in our lives. We also all know that eventually we will shuffle off this mortal coil. Without suggesting that condominium and cooperative associations need to start functioning as quasi assisted care living facilities, it still makes sense that some thought should be given to vulnerable residents whose activities (including a death) can impact others. If community members took the time to get to know each other, it would not come as a surprise when a resident becomes terminally ill or mentally unbalanced. In an ideal world, neighbors would be there to assist each other in a dignified way as opposed to having to sue for damages resulting from a leaking corpse.

Spring cleaning was typically done to air out and refresh a home that had been closed tight to the harsh elements for many months. Stripping down and cleaning heavy fabrics and furniture to make room for fresh air and light not only made sense from a physical standpoint but as a symbol of rebirth and renewal for the longer, brighter summer days ahead.

In Florida, we don’t have the need to engage in that type of spring cleaning but our communities could benefit from a twist on this seasonal tradition by reviewing and cleaning up items which may have gone untended for far too long.

Your board should take this opportunity to clean up the following:

Update your association’s annual corporate report which must be filed by May 1st. HOAs now have new information to report if they haven’t already done so last year. When filing your report, make sure your list of corporate officers is correct and that your choice for the association’s registered agent makes sense. A former director, manager or attorney who is no longer affiliated with your community should be replaced by someone who is serving or representing the community and who understands the fiduciary obligations associated with the registered agent’s functions.

Confirm that your association filed its tax return. Yes, you are a not-for-profit corporation but that does not automatically exempt you from paying taxes; you will need to file a tax return timely each year.

Review all contracts to which the association is a party to confirm if any renewals are coming up. This is particularly important if you have service contracts (laundry leases, elevator maintenance, etc.) which contain automatic renewal clauses. If you miss the often narrow window of opportunity to cancel the contract you could be bound for several more years. A word to the wise: avoid signing contracts with automatic renewal clauses as they rarely help the customer.

Pull out your insurance policies and read through them carefully. This is particularly important as we head into our six-month hurricane season. Pay particular attention to the property appraisal associated with your coverage. Is it correct? Some communities have discovered that their coverage has been based on inaccurate property appraisals for years resulting in higher premiums and/or inadequate coverage.

Scrutinize any leases for upcoming renewals? If the association is a party to a lease it must determine if it wants to continue to be bound by that lease if a renewal is around the corner. If there are units which are rented in the community, your board should review those residential leases to ensure that all current tenants are abiding by the rules and that the owners/landlords are current in the payment of monetary obligations to the association.

Take a look at a status report from your association attorney outlining where you are in the collection of delinquent assessments owed to the association. You should be able to tell where you are on the foreclosure timeline for each delinquent property.

Perform a community walk-through. What better way to see how everyone else is doing with their spring cleaning efforts than to walk around and see how things look. Your board should also take note of the common areas and any items which require attention, maintenance, repair or replacement.

Things that get noticed often get improved. What other items should go on the list for an association’s spring cleaning?

In the last few weeks, several clients have discussed large renovation projects which, unbeknownst to them, include material alterations requiring membership approval. In a Florida condominium, a material alteration or substantial addition to the common elements requires the approval of at least 75% of the total membership pursuant to the Condominium Act unless a lower percentage is specified in the Declaration of Condominium. Cooperative and homeowners’ association boards similarly need to check their governing documents as well as the statutes governing them to determine the threshold needed to approve a material alteration or substantial addition.

Of course, the overarching question is what exactly constitutes a material alteration or substantial addition? You would be surprised at the answers you get when you ask people living in associations that question. Let’s take a quick quiz and see how adept you are at spotting a material alteration.

Which of the following constitutes a material alteration in a Florida condominium?

a) Changing the roof from flat tile to barrel tile

b) Replacing old carpeting in the lobby with marble

c) Removing a large tree in the common park

d) Replacing the pool deck surface from Chattahoochee to stone

e) Changing the shuffleboard court to an outdoor seating area

f) Changing out old light fixtures to new energy-efficient LED lighting

g) Changing the paint color in the hallways from beige to light gray

Your potential answers are:

a) All of the above

b) None of the above

c) Everything except c and f

d) Everything except f

*********

The answer is (drum-roll) all of the above constitute material alterations or substantial additions. Some of the above may not need a membership vote if the replacement material for the pool deck, for example, is needed because the original pool deck surface is no longer manufactured. Also, if a large tree is dead and requires removal, typically safety and security concerns trump the necessary material alteration vote. County or city mandates to undertake certain projects also will take priority. Still, each situation and proposed alteration is different so it is crucial that your board consult with your attorney to discuss whether or not your project requires membership approval prior to moving forward.

Did you know that in Florida we had a Community Association Living Study Council (CALSC) which was created by the Florida Legislature in 2008?

The stated purposes for this body included the following:

Receive, from the public, input regarding issues of concern with respect to community association living, including living in condominiums, cooperatives, and homeowners’ associations. The Council will make recommendations for changes in the law related to community association living. The issues that the Council will consider include, but are not limited to, the rights and responsibilities of the unit owners in relation to the rights and responsibilities of the association.

Review, evaluate, and advise the Division concerning revisions and adoption of rules affecting condominiums and cooperatives.

Recommend improvements, if needed, in the education programs offered by the Division.

Review, evaluate, and advise the Legislature concerning revisions and improvements to the laws relating to condominiums, cooperatives, and homeowners’ associations.

The House Judiciary Committee (chaired by Rep. Dennis Baxley) recently voted to discontinue the CALSC prior to the issuance of the Council’s Report. It had been hoped that the Council would be reformatted in a more workable fashion rather than disbanded altogether. There had been issues about the timing of the Council’s work in relation to the Session. For example, the Council met every five years, had a 6-month term which proved too short for proper public input and the Legislature recesses before the Council’s report is finished.

What do you think? Does the significant percentage of Florida’s population living in shared ownership communities require the existence of an entity like the CALSC? Is its disbanding a harbinger of things to come or is it an opportunity to reformat the Council in a more workable format where meaningful public input can truly be gathered and incorporated into legislative proposals?

DONNA DIMAGGIO BERGER is a Shareholder with the law firm of Becker & Poliakoff. She has represented all types of shared ownership communities throughout Florida over the last two decades and has worked closely with the Legislature to shape the laws that govern private residential communities.

LISA MAGILL is a shareholder in Becker & Poliakoff's statewide Community Association Law practice group. She has been a leader of and active in various organizations dedicated to community association issues, especially outreach and education.

LINDSAY RAPHAEL a partner with Tripp Scott, focuses her practice on condominium and homeowners association matters, as well as property financing and transaction counsel to buyers, sellers, lenders and developers of residential and commercial real estate. She is a regular contributor to Condo Management Magazine.

JEAN WINTERS has focused on representation of both community associations and homeowners living in associations since 2006. She is a partner at Winters & Winters, P.A. The firm has more than 30 years of combined experience in real property law.

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. Being general in nature, the information provided may not apply to your specific factual or legal set of circumstances. No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney. If you require legal advice, please consult with a competent attorney licensed to practice in your jurisdiction.